Definition ∞ External Audit Failure occurs when an independent security review of a smart contract or protocol misses critical vulnerabilities that are later exploited. This oversight indicates a deficiency in the auditing process, methodology, or the expertise of the auditing firm. Such failures can severely undermine user trust and lead to substantial financial losses.
Context ∞ Reports of external audit failures often follow major exploits in decentralized finance, prompting industry-wide discussions about the limitations and effectiveness of current auditing practices. The community is actively seeking to enhance audit quality through standardization, multi-auditor approaches, and integrating automated tools for vulnerability detection. These incidents underscore the continuous need for improved security validation in the digital asset space.
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